United States

 Investors seemed to overlook recent geopolitical risks as they placed their bets on a potential dovish pivot by the Federal Reserve. Big tech companies, which have been the main drivers of the rally, continued to soar. Meta and Amazon both posted gains of 2.5% and 2.4%, respectively, while Nvidia briefly saw its market cap surpass US$3.8 trillion, reflecting renewed optimism surrounding artificial intelligence and strong corporate earnings.

The bond market mirrored this optimism, with the yield on 10-year US Treasuries falling to 4.24%, reinforcing expectations for at least two rate cuts by the end of this year. Economic data showed that Q1 GDP growth had been revised down to a modest 0.5% annualised pace from -0.2% previously, and consumer spending posted its weakest performance since the pandemic began. Despite recurring jobless claims rising to their highest level since 2021, initial claims edged lower, signalling continued strength in the labour market.

The VIX, which measures stock market volatility, continued its sharp decline, closing at 16.59, marking a dramatic drop from its April peak above 52 during tariff-induced market turmoil. Traders are now awaiting tonight’s release of personal income and spending data, which could further influence expectations around inflation and Fed policy. In addition, growing speculation surrounding President Trump’s potential nomination of a new Fed Chair by October has added another layer of uncertainty to the markets. Some investors are considering the impact of a more dovish Chair on future monetary policy, potentially overshadowing the current stance of Fed Chairman Jerome Powell. In focus tonight is PCE inflation, the Fed’s preferred measure, expected to show headline prices rose 2.3% and core prices rose 2.6% over the 12 months.

Europe

European equities followed global trends but closed with modest movement, as the Stoxx Europe 600 ended flat after initially rising 0.4%. The consumer sector weighed heavily on the performance, with shares in Carrefour slumping 10% to their lowest level since 1993. Analysts at JPMorgan Chase & Co. suggested the French supermarket giant could see further declines due to a disappointing earnings report next month. Meanwhile, the mining sector performed well, bolstered by rising metals prices. H&M rose 3.7% after reporting strong earnings, largely driven by solid demand and tighter cost control measures.

In corporate news, Shell confirmed it had no plans to acquire BP, having refuted reports that it was in talks for a deal that would have been one of the largest oil mergers in decades.  In the payment processing sector, shares of Worldline rose more than 20%, recovering after a dramatic 38% drop earlier in the week due to allegations of fraud cover-up.

The euro and pound both firmed against a weakening US dollar, rising 0.4% and 0.5%, respectively, while European bond yields remained relatively stable. German 10-year yields held steady at 2.57%, while UK 10-year yields dipped slightly to 4.47%.

*Note: These prices are based on futures and/or CFD pricing and may therefore differ slightly from spot pricing.

 Commodities

Oil prices showed a slight recovery, with Brent crude rising 0.1% to US$67.75 per barrel and WTI crude up 0.8% to US$65.44. The rebound came as traders shifted their focus from geopolitical risks to supply-side developments, including increased output from Kazakhstan’s state energy company. Gold prices remained flat at US$3,327.92 per ounce, while copper extended its gains, supported by bullish forecasts from Goldman Sachs, which predicted the price could reach a 2025 peak of around US$10,050 per tonne.

Iron ore rose by 0.9% to US$93.55 per tonne, recovering from recent declines driven by concerns over Chinese demand. The Australian dollar firmed 0.5% to US65.46¢, benefiting from the weaker US dollar. Cryptocurrencies continued their volatile trend, with Bitcoin slipping 0.2% to US$107,496, while Ether fell 0.2% to US$2,434.57.

Bond yields remained subdued, with the US 10-year yield declining to 4.24%, while Australia’s 10-year yield also slipped to 4.10%, reflecting the broader risk-off sentiment and expectations for central bank easing in both economies.

Economic Calendar

EU:

• Consumer Confidence (June) 19:00

US:

• PCE Inflation (May) 22:30